Tuesday, 15 March 2022

AM — Talks with the IMF haven’t started yet, but the Finance Ministry is working on plans to handle our rising import bill

TL;DR

WHAT WE’RE TRACKING TODAY

Good morning, friends, and happy hump day. We have a particularly packed issue this morning, so let’s jump right in:

We are “not yet” in talks with the International Monetary Fund (IMF) over a fresh loan, Planning Minister Hala El Said told Reuters yesterday. Her statements come a few days after IMF boss Kristalina Georgieva said that the global lender is talking with the government on how to mitigate the impact of surging global food prices on vulnerable people and businesses. She did not make clear whether the IMF could offer further financial support to Egypt and didn’t elaborate on the measures it is currently discussing with the government.

Any new loan from the IMF would be our third in six years, after we secured a USD 12 bn facility in 2016 tied to much-needed economic reforms amid the EGP flotation, followed by another USD 8 bn to support the economy through the pandemic.

STILL- The Finance Ministry is currently working on an emergency plan to handle the country’s rising import bill on the orders of President Abdel Fattah El Sisi, according to a cabinet statement out yesterday. The interior and supply ministries have been tasked with ensuring the availability of items, as well as taking legal action against sellers that “try to exploit the crisis to raise prices in an unjustified way,” the statement said.

El Sisi has told the government to offer incentives to farmers to ramp up wheat production, the statement said, adding that specific details on the measures will be announced soon. We have chapter and verse on the government’s plan to increase its local wheat purchase in our commodities section below.

AND- Contractors are putting their heads together on raw materials price hikes: The Egyptian Federation of Construction and Building Contractors will hold an “urgent” meeting today to discuss “unjustified rises” in the local price of steel, cement, and other materials, according to Al Mal. One union member was quoted as saying that contractors have been struggling with shortages and high prices in the steel market in recent days, potentially jeopardizing project schedules.

Is an export ban in the works? Figures in the metals industry have called on the government to ban the export of all metals for one year in response to rising prices. The Trade Ministry last week banned the export of key foods, including wheat, flour, oils and corn, for three months.


SLEEPER STORY of the week: Everything from iPhones to to cars could be in shorter supply with China’s Shenzhen now in full covid-19 lockdown thanks to China’s zero-covid policy. The city is a major global manufacturing center, as Fortune says; the lockdown sent Chinese shares into a tailspin yesterday, as we note in Planet Finance, below.

Speaking of Apple: Key supplier Foxconn could be looking to open a USD 9 bn factory in Saudi Arabia to “make microchips, electric-vehicle components and other electronics like displays,” the Wall Street Journal writes in an exclusive. How KSA will find the low-cost labor needed to make that economical is anyone’s guess.

HOT TUB TIME MACHINE to 2021- Another Evergreen ship has run aground, this time near Baltimore on the East Coast of the United States. Bloomberg has the story of the Ever Forward.

SIGN OF THE TIMES- Men’s suits and coal: These were two of the items removed from the UK’s inflation basket of goods by the country’s statistics agency yesterday, as the movement toward WFH makes formal workplace attire less important and the UK government gets ready to ban coal for domestic heating next year. What’s in? Antibacterial surface wipes and veggie sausages.

PSA- We have 18 days left until the start of Ramadan. If you’re in Cairo, you’ll have until 4:16am CLT to finish sohour before the start of the fast. Maghrib prayers are at 6:14pm on the first day. On the final day of the holy month, you’ll be looking at 3:37am as the cut-off for sohour and will break your fast at 6:32pm.

WHAT’S HAPPENING TODAY-

LNG carriers will pay the full rate to transit the Suez Canal starting today, the Suez Canal Authority (SCA) announced yesterday. SCA chief Osama Rabie said in a televised interview last night that the move came amid rising demand for natural gas (watch, runtime: 5:57). Vessels transporting natural gas had enjoyed a 25% reduction in transit fees, a figure that was cut to 15% last October amid rising natural gas prices.

The move will further increase Suez Canal revenues, which hit a record high last year, and come as public finances face pressure from rising international commodity prices and the prospect of slumping tourism receipts thanks to the war in Ukraine. The lifting of the discounted rate will bring in around USD 20-22 mn of monthly revenues, Rabie said.

SOUND SMART- The SCA has been phasing out other pandemic-era price breaks in recent months. It hiked transit tolls by 6% for most ships at the start of February, fueling a 15% y-o-y rise in revenues during the month.

It’s Fed day: The Federal Reserve will start a two-day meeting to review interest rates today and is expected to kick off its long-signposted tightening cycle with a 25-bps hike. Look for that announcement tomorrow evening, Cairo time. The market previously anticipated the central bank to go bigger and raise interest rates by 50 bps, but now expects the uncertainties triggered by the conflict in Ukraine to have changed its calculations. The Central Bank of Egypt will hold its next monetary policy meeting on Thursday, 24 March.

The Export Smart conference will take place today at the Royal Maxim Palace Kempinski.

THIS WEEK-

Members of the public will be able to take a stroll along the Ahl Masr promenade for the first time on Friday when the government opens the first, 1.8-km section running between Imbaba Bridge and the 15 May bridge. The two-level walkway will house restaurants, cafes and shops, as well as a theater and three parking lots.

CIRCLE YOUR CALENDAR-

Green energy forum: The German Arab Chamber of Industry and Commerce is hosting the Egyptian German Green Energy Forum next Tuesday, 22 March. The event runs 5:30-9pm CLT at the InterContinental Cairo Semiramis.

ITIDA’s Technology Innovation and Entrepreneurship Center is organizing its first “metaverse hackathon,” according to a press release (pdf). The challenge bagan on 15 February and will run until 15 June.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

enterprise

*** It’s Going Green day — your weekly briefing of all things green in Egypt: Enterprise’s green economy vertical focuses each Tuesday on the business of renewable energy and sustainable practices in Egypt, everything from solar and wind energy through to water, waste management, sustainable building practices and how you can make your business greener, whatever the sector.

In today’s issue: Egypt has the highest levels of marine-plastic waste pollution in the region, according to a newly-released World Bank report. In this week’s issue of Going Green, we look at how the cheap production of single-use plastics and a less-than-ideal waste management system have contributed to a whole lot of plastic ending up in our water — and what we can do to clean up our act.

enterprise

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COMMODITIES

Gov’t to up local wheat prices and cut fertilizer costs — and appears to be considering price caps for unsubsidized bread

A raft of new wheat-related measures announced by the Madbouly government yesterday aim to bolster the country’s food security in the wake of the Russia-Ukraine war.

The Supply Ministry has once again hiked local wheat purchase targets: The government is now aiming to buy more than 6 mn tonnes of domestic wheat this harvest season, up from its previous 5.5 mn-tonne target, Supply Minister Ali El Moselhy said yesterday.

The government had previously upped its local target by nearly 40% in the days after Russia invaded Ukraine. The war in Europe has put into question the continued supply of up to 80% of our wheat imports and thrown the global grain markets into disarray. Prior to the arrival of two shipments last week, we had enough wheat in reserve to sustain us for 4.5 months and the local harvest — which begins in April — should provide another four months of supply, the government has said.

The government is going to pay more for the wheat it buys from domestic farmers, cabinet spokesperson Nader Saad said during a televised interview last night (watch, runtime 1:49). The new price will be announced soon, he said.

Farmers had called on the government to raise prices and purchase wheat for EGP 1k per ardib, up from EGP 820, to help the domestic industry cope with inflation and meet production targets. “If the government doesn’t raise prices, it won’t be able to collect even 3 mn tonnes of wheat” this season, said Farmers’ Syndicate head Hussein Abu Saddam.

The government is also set to make new announcements on subsidized fertilizer prices for wheat farmers, Saad said on Kelma Akhira. Surging fertilizer prices is currently one of the key impediments for Egyptian farmers, people in the industry say.

But where is it going to store all this wheat? Egypt currently only has storage capacity of around 3.4 mn tonnes, according to Bloomberg Asharq, raising questions about where it plans to put the extra quantities of local wheat.

Are price caps for unsubsidized bread in the works? We can expect to see a “new mechanism” to regulate the price of unsubsidized bread soon, said Saad (watch, runtime 3:16). The planned regulations will put into consideration global inflation, wheat prices, and will be fair to the end-consumer as well as bakeries, Saad said, after show host Lamees El Hadidi said that the price of unsubsidized bread “has now risen by 100%” amid the global surge in wheat prices.

The government is also stepping in to avoid price increases at private bakeries by effectively subsidizing the bakeries and selling them flour at a discounted rate, Ragab Shehata, head of the Rice Division of the Federation of Industries, said Sunday. As of yesterday, private bakeries have been able to purchase a ton of flour from the government for EGP 8.5k, 22% below its current market price.

IN GLOBAL COMMODITIES NEWS-

Not helping global food insecurity: Russia has signaled that it could join the wave of food protectionism and ban (some?) wheat, corn, rye and barley exports until the end of June, the Agriculture Ministry told Interfax. A decision could come into effect today and would last until 30 June, the news agency reported. Russia is the world’s largest wheat exporter, producing 16% of global supply, according to USDA data (pdf). The country also supplies 13% of the world’s barley.

This isn’t a complete ban, Reuters reported the country’s deputy prime minister as saying yesterday. “Export of grain within the quota under individual licenses will be allowed,” Viktoria Abramchenko said, playing down the impact of the ban on global markets.

Russia would join Egypt and a number of other countries to put curbs on key exports: Egypt last week banned the export of key food commodities including wheat, flour, oils and corn. The ban will last for three months.

Also not helping global food insecurity: German agrochemical conglomerate Bayer has threatened to suspend the sale of essential crop supply to Russia unless the country withdraws from Ukraine — a move that would likely cause further volatility in global food prices, the Financial Times reports.

GOOD NEWS- Oil prices continued to slide yesterday on hopes that Russia and Ukraine were moving towards a peace agreement. Brent crude fell another 5% to reach USD 106.90 a barrel. The oil benchmark has now fallen more than 20% after soaring to USD 130 last week.

IPO WATCH

Swvl expects US regulators to greenlight its Nasdaq IPO today

Mass transportation startup Swvl expects to receive final approvals on its IPO from the US’ Securities and Exchange Commission (SEC) today, CFO Youssef Salem told Enterprise. The Egypt-born ride-hailing app is set to go public on the Nasdaq through its merger with US SPAC Queen’s Gambit Growth Capital by the end of the month, Salem added, pending sign-off from Queen’s Gambit at its general assembly meeting on 30 March.

Refresher on the transaction: The company will list 35% of its shares on the exchange (c. 50 mn shares) and still plans to invest USD 250-300 mn over the next three years to expand its global footprint after it goes public, Salem confirmed.

The backdrop: It’s impressive that Swvl looks set to cross the finish line given the headwinds SPACs (and the Nasdaq) had faced:

  • SPACs are getting smacked: Investors are demanding their money back from SPACs post-IPO like never before. Redemption rates soared to 90% in February, up from just 14% a year before.
  • And canceled: The number of SPAC mergers terminating before the IPO is soaring. After 2020 saw only seven SPAC failures, around two dozen have been canceled since the middle of last year, including at least six in the first six weeks of 2022. Two — Kredivo and Memic — have been canceled in the past week alone.
  • Driving the SPAC-off: An extended sell-off in tech stocks. The Nasdaq has fallen into bear market territory due investor concerns over inflation, rising interest rates and the war in Ukraine, and is now down 21% from its peak in November.

This is forcing companies to turn to new sources of funding: Funds such as alternative asset manager Atalaya Capital Management and PE giant Apollo have been agreeing with companies to purchase shares from exiting investors, a form of investment known as redemption capital, according to the FT.

Anghami beat Swvl to the punch for the Middle East’s first US tech listing — but saw mass redemptions: Shareholders traded in 9.8 mn of the SPAC’s 10 mn shares for cash on its first day of trading in February.

Swvl isn’t worried about volatile conditions: “We are not concerned because we have a pipeline of fully committed capital, between the PIPE investments we’ve received and non-redemption agreements that we’ve signed with Queen’s Gambit’s investors,” Salem told us.

What PIPE investments? The startup received a USD 21.5 mn funding boost last month from the European Bank for Reconstruction and Development (EBRD) and auto parts maker Teklas’ VC arm Teklas Ventures, in a private placement (PIPE). The latest investment took Swvl’s expected PIPE finance to USD 121.5 mn. Other PIPE investors include our friends at Chimera as well as Agility, Luxor Capital Group, and Zain Ventures.

Advisors: Law firm Ibrachy & Dermarkar is Swvl’s legal advisor on the merger, while Vinson & Elkins and Shahid Law Firm are acting as advisors for Queen’s Gambit.

ECONOMY

Remittances hit record high in 2021

Remittances from Egyptians abroad rose 6.4% in 2021 to a record high of USD 31.5 bn, according to central bank figures (pdf) released yesterday.

Egypt was one of the world’s top remittance destinations last year, according to the World Bank, which puts us fifth behind India, China, Mexico and the Philippines.

Remittances have become an increasingly important source of foreign currency for Egypt, particularly following the hit to tourist revenues caused by the covid-19. The value of remittances has picked up steadily since the pandemic, with inflows during the previous fiscal year reaching a record USD 31.4 bn.

DEBT WATCH

Palm Hills approves EGP 3.25 bn sukuk sale + UE Finance closes Upper Egypt’s first-ever securitization

Palm Hills Developments’ general assembly approves EGP 3.25 bn sukuk issuance: Shareholders voting at the company’s ordinary general assembly approved the issuance of shariah-compliant bonds worth EGP 3.25 bn at a meeting on Sunday, after its board of directors greenlit the sale in February, according to a disclosure to the bourse (pdf). The sukuk issuance, which will be managed by Contact Financial Holdings’ (formerly Sarwa Capital) sukuk arm, will finance the developer’s Badya project. The sale could go ahead by the end of March, Sarwa Promoting and Underwriting head Ayman Elsawy told us in January, making it our first corporate sukuk issuance in 2022.


UE Finance has closed a securitized bond issuance worth almost EGP 1.2 bn, according to a statement (pdf) by legal advisor Dreny & Partners. The offering was backed by a portfolio of financial leasing contracts and is the first securitization transaction in Upper Egypt, the statement said.

Advisors: CIB acted as lead arranger and financial advisor, while CIB, Arab African International Bank, Ahli United Bank, the National Bank of Egypt, Banque du Caire, and Suez Canal Bank acted as joint underwriters of the issuance. Dreny & Partners were the legal advisors on the transaction.

OTHER DEBT NEWS- BM Lease is considering plans to securitize at least EGP 1 bn of its portfolio during 4Q2022.

enterprise

WAR WATCH

No progress in peace talks + US issues warning to China

Peace talks between Russia and Ukraine made little headway yesterday as Russian forces continued to shell targets in Kyiv and eastern Ukraine. An aide to Ukrainian President Volodymyr Zelenskiy said the sides took “a technical pause” and will restart talks on Tuesday, the Associated Press reported.

Both sides have signaled optimism in recent days, with senior Russian and Ukrainian officials floating the possibility of a signed agreement in the coming days.

MEANWHILE- The next big question in the conflict (other than will they / won’t they?): Which way will China swing? After it failed to get China to support its sanctions against Russia, the US is worried about Beijing’s close ties with Moscow, and yesterday warned China not to assist Russia’s military campaign during talks. US national security adviser Jake Sullivan held a seven-hour session with Chinese diplomat Yang Jiechi in Rome yesterday, which one US official described as “intense.” Another official told Axios that Sullivan has “deep concerns about China’s alignment with Russia” and highlighted the “potential consequences of certain actions” during the meeting.

Washington has told its allies that China has shown willingness to offer military assistance to the Russians, but apparently hasn’t shared any intelligence to support its claims, officials with knowledge of the diplomatic cables tell the Financial Times.

Zelensky will give a virtual address to the US Congress tomorrow, Reuters reported, in a move expected to put further pressure on Washington to go further on Russian sanctions. This comes after the lawmakers passed a budget bill that included USD 13.6 bn in aid for Kyiv last week.

EGYPTIANS IN UKRAINE-

Egypt’s Red Crescent (ERC) has set up a relief center at the Siret crossing on the Ukrainian-Romanian border, cabinet said in a statement yesterday. The ERC team is providing medical aid, meals and psychological support to Egyptians and Arabs fleeing Ukraine.

Almost 2.2k overseas students who have had to flee Ukraine have applied to enroll on courses in Egyptian universities, Immigration Minister Nabila Makram told Sada El Balad. As of yesterday, overseas students studying in Ukraine have been able to apply to transfer to unis at home to complete their degrees.

PLANET WAR FINANCE-

Russia’s finance ministry said it had approved a “temporary procedure” allowing banks to pay foreign-currency debt — but warned that their ability to make the payments would depend on sanctions, Reuters reports. In the event that sanctions make the payments impossible, the country could need to pay off its foreign currency debt in RUB, the ministry added — a situation tantamount to a default. Sanctions on the Russian central bank have left it without access to most of its foreign reserves, leaving it unable to meet foreign-currency bond repayments.

Default imminent? Fitch said last week that it expects an “imminent” default — which is a big problem for Russia but unlikely to trigger a global financial crisis, IMF head Kristalina Georgieva said on Sunday.

Ukraine’s economy is plunging into a devastating recession due to the conflict, one that the IMF thinks could cause a contraction of 25-35%. The country will likely see “output falling 10% this year assuming a prompt resolution of the war,” the Fund said in a report (pdf) yesterday.

EXODUS-

Citigroup is pulling back even more from Russia, saying yesterday that it will not take on new clients and will further cut its exposure, according to Reuters. The bank’s announcement comes a few days after JPMorgan, Goldman Sachs and Deutsche Bank said they would suspend operations in Russia.

EARNINGS WATCH

Edita’s net income jumps 55% in 2021

Edita Food Industries’ net income rose 55% in 2021, reaching EGP 472 mn, according to the company’s latest earnings release (pdf). The bottom line growth was supported by a 31% increase in revenues, which rose to EGP 5.25 bn on the back of better pricing and sales volumes, the company said. The snackfoods company’s net income increased by almost 52% y-o-y in 4Q2021, recording EGP 194.2 mn, while revenues rose 25% to EGP 1.5 bn. The release comes two weeks after the company announced their preliminary 2021 figures.

Looking ahead: Heading deeper into 2022, Edita is “pivoting from a focus on recovery and resilience to expansion mode,” it said. “Edita’s immediate priority is to drive volume growth across its segments while further optimizing its product portfolio to diversify revenue streams… the company will actively expand its production capacity to drive growth and roll out new, higher-value propositions, while shifting consumers increasingly towards higher price points,” it said.

MOVES

Mrsool has appointed Karim Gamal (LinkedIn) as its country manager in Egypt, replacing Osama Harfoush, who will now act as a regional consultant, according to Al Borsa. Gamal joins the regional delivery startup after having worked as regional operations director at Talabat and regional call center manager at Careem.

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LAST NIGHT’S TALK SHOWS

The Sisi administration’s bid to tamp down rising food prices dominated the airwaves last night after Prime Minister Mostafa Madbouly set up a committee to look into measures to limit the rise in price of strategic commodities. Committee members will meet weekly to stay on top of the economic situation, said Kelma Akhira’s Lamis El Hadidi (watch, runtime 1:05). We have more on the story in this morning’s Commodities section, above.

But what about fuel prices? Cabinet spokesperson Nader Saad declined to comment on whether the government would move to raise fuel prices next month, telling Lamis that any oil-related decisions are made by the independent fuel pricing committee (watch, runtime 1:06).

We’d wager quite a few Enterprise mugs that fuel prices won’t be the same come April, at least if oil prices remain in the three-figure range — and at the rate things are going, there’s no guarantee that they will be (again, more on this above). The government has hiked fuel prices by 12-16% over the past year as international oil benchmarks have risen.

CORRECTION- In yesterday’s Talk Shows section, we wrote that the cabinet is considering supplying reduced amounts of flour to bakeries to combat stockpiling and inflating prices. The government in fact held talks with industry players, where the suggestion was made that bakeries could be required to sell unsubsidized bread by weight rather than pricing per loaf, to ensure that they aren’t skimping on loaf size. The story has been updated on our website.

EGYPT IN THE NEWS

Bread prices continue to get attention in the foreign press this morning: In a Bloomberg opinion piece, David Fickling suggests that China may be able to step in and fill the Ukraine / Russia-shaped hole in Egypt’s wheat supply. Beijing has amassed half of the world’s wheat reserves, enough to keep its country of 1.4 bn people fed for 18 months. This makes it easy for Beijing to assume the role of grain provider of last resort and bail Egypt out of its supply crisis.

Human rights are back in the news after Amnesty International criticized Egyptian authorities for their reaction to videos allegedly showing police abuse.

ALSO ON OUR RADAR

Egypt continues preparations for COP27: The government will launch a “national climate dialogue” later this month to help spread environmental awareness ahead of the COP27 summit, which will take place in Sharm El Sheikh in November, the Environment Ministry said yesterday. Under the initiative, training programs will be introduced at universities as part of a wider set of educational activities aimed at youth and women.

Meanwhile: Prime Minister Moustafa Madbouly held talks with representatives of Australian mining company Fortescue to discuss cooperation on green hydrogen, according to a cabinet statement. Fortescue Future Industries is a subsidiary set up by the miner in 2020 dedicated to green energy sources such as hydrogen, ammonia, solar and wind.

In fintech news: Hospitality management system Kwentra has partnered with fintech platforms Paymob and Sympl to launch a new service designed to allow Egyptian hotels to offer new payment options to their customers, the company announced in a statement (pdf). Kwentra Pay will run on Paymob’s payments infrastructure, while Sympl will offer buy-now-pay-later options to the hotels’ customers.

PLANET FINANCE

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Chinese stocks see biggest sell-off since the 2008 recession: Hong Kong-listed Chinese stocks had their worst day since the global financial crisis, as Beijing’s continued ties with Russia, regulatory concerns, and new covid-19 lockdowns sparked a panic selloff, Bloomberg reports. The Hang Seng China Enterprises Index closed down 7.2% in its biggest drop since 2008, while the Hang Seng Tech Index plunged 11% — its worst performance since the index’s 2020 launch — losing USD 2.1 tn in value.

Covid + geopolitics weight on shares: US officials claimed on Sunday that Moscow has asked China for military assistance to help in its war against Ukraine, sparking concerns among traders of blowback on Chinese firms that could extend to sanctions. This came on the same day that the city of Shenzhen, one of the country’s most important commercial hubs, entered full lockdown due to a surge in covid cases.

Shares in China are continuing to fall this morning, with the Hang Seng losing 2.4% as of dispatch time and the Shanghai index down 1.6%.

It wasn’t much better over on Wall Street, with tech shares suffering heavy losses as hopes for a Russia-Ukraine peace agreement dimmed and investors weighed the impact of the Shenzhen lockdown. The Nasdaq fell 1.9% leaving it down more than 20% from its peak in November, and the S&P 500 lost 0.7%. Apple dropped 2.7% in a sell-off sparked by the news that its supplier Foxconn had halted production in Shenzhen.

Later today: US stocks are currently on track to open in the green later today, while key European exchanges are looking at early losses.

In other business news worth knowing:

  • Saudi pharma retailer Al Dawaa soared on its trading debut, Bloomberg reports, marking the latest in a string of bumper public debuts in Riyadh. Shares in the pharma firm rose 18% to SAR 86.1, after pricing at the top of the range in its USD 500 mn IPO. The company sold 30% of its shares (25.5 mn shares) in the listing.
  • Binance has received licenses to provide crypto services in Dubai and Bahrain, Bloomberg reports.

Down

EGX30

10,420

-0.6% (YTD: -12.8%)

None

USD (CBE)

Buy 15.66

Sell 15.76

None

USD at CIB

Buy 15.66

Sell 15.76

None

Interest rates CBE

8.25% deposit

9.25% lending

Down

Tadawul

12,492

-0.9% (YTD: +10.7%)

Down

ADX

9,542

-1.0% (YTD: +12.4%)

Down

DFM

3,354

-1.4% (YTD: +4.9%)

Down

S&P 500

4,173

-0.7% (YTD: -12.4%)

Up

FTSE 100

7,193

+0.5% (YTD: -2.6%)

Down

Brent crude

USD 106.90

-5.1%

Up

Natural gas (Nymex)

USD 4.67

+0.3%

Down

Gold

USD 1,954.90

-0.3%

Up

BTC

USD 39,053

+1.0% (as of midnight)

THE CLOSING BELL-

The EGX30 fell 0.6% at yesterday’s close on turnover of EGP 771 mn (16.5% below the 90-day average). Local investors were net buyers. The index is down 12.8% YTD.

In the green: MM Group (+1.8%), Egypt Kuwait Holding-EGP (+1.3%) and Madinet Nasr Housing (+1.2%).

In the red: Rameda (-5.5%), Ibnsina Pharma (-5.3%) and TMG Holding (-3.6%).

greenEconomy

Marine-plastic pollution is growing, and Egypt has a lot to do with it: Throughout the world, the sight of plastic bags floating in our seas and oceans has become all too familiar. But in Egypt, our levels of marine-plastic waste pollution are the highest in the region and set to continue soaring, even though our per capita plastic waste generation is among the region’s lowest, according to a newly-released World Bank report (pdf). So how’s all this plastic ending up in our water? It’s mainly down to poor waste management, the World Bank argues, though the cheap production of single-use plastics doesn’t help.

Regionally, Egypt tops the charts in marine-plastic pollution: Egypt is the MENA region’s biggest marine-plastic polluting country, and the seventh-biggest in the world. According to 2010 data cited in the report — the most recent available — Egypt alone accounted for 3% of the discharge of plastic waste into the world’s oceans and seas, with regional peers Algeria contributing 1.6% and Morocco 1%.

And it’s only set to grow: By 2025, levels of Egypt’s plastic waste entering marine spaces are set to have doubled from 2010, and will be almost double those of Algeria — the second highest regional contributor to marine-plastic waste, the report shows.

What kind of plastic pollution are we talking about? The kind you can see, and the kind you can’t: Macroplastics — in the form of bags, food containers, sweet wrappers, or toys — make up the biggest portion of marine-plastic pollution, accounting for roughly 94% of all plastic items entering the Mediterranean each year. But global levels of microplastics — which currently consist largely of dust from tire abrasion, textiles, microbeads and production pellets — are set to double by 2050 from 2020 levels, as plastic material in the environment is slowly ground down into smaller pieces.

The Med is a plastic pollution hotspot: The Mediterranean is one of the most plastic-polluted seas globally, containing some 7% of the world’s marine-debris microplastics, despite holding just 1% of the world’s water. Every year, some 150k-500k tons of macroplastics and 70k-130k tons of microplastics pour into the Med, bringing the total quantity to an estimated 1.1 mn tonnes as of 2020, according to data cited in the report.

And Egypt is by far the biggest contributor: Egypt is responsible for a third of all plastic that enters the Mediterranean, with Turkey contributing 16.4%, Italy 10.7% and Algeria 5.9%.

Meanwhile, total levels of waste and plastic waste are expected to grow in MENA: Total waste generation in MENA is expected to double to 255 mn tons from 129 mn tons by 2050. Plastic waste constitutes some 12% of the region’s total waste, and this share is expected to increase as income levels rise.

Egypt’s plastic waste generation per capita is actually among the region’s lowest: According to 2016 data — the most recent available — Egypt generates approximately 0.7kg of plastic waste per person per day, putting us on the lower end of the regional spectrum for waste generation — out of 20 countries in the region, we’re number 14. This compares to 0.3 kg for residents in high-income GCC countries like Kuwait and the UAE, and those in Morocco, Syria and Yemen who generate less than 0.05 kg.

This is a sign that Egypt’s high levels of marine-plastic pollution are largely driven by poor waste management: The report identifies poor waste management as the major reason for plastic leakage in the Mediterranean. More than two-thirds of Egypt’s total solid waste is mismanaged — burned, disposed of as litter or left in uncontrolled dump sites — compared to 53% in MENA and just 10% in Bahrain and 8% in Saudi Arabia.

What’s driving this? Inadequate waste collection is one factor: Egypt has particularly low waste collection rates compared with regional peers. As of 2016, Egypt’s urban waste collection rate stood at 57.5%, compared to 80% in Tunisia, 85% in Morocco, and close to 100% in other countries. Egypt’s rural waste collection rates were even lower, coming in at 15%. Outdated equipment heightens inefficiencies in waste collection and treatment: trucks used for collection in Cairo are typically old and have insufficient capacity, so often overflow with trash, the report adds.

Open dumping of waste is another: Though there’s been some improvement in landfills in Egypt in recent years, the open dumping of waste remains prevalent. As of 2016, around 90% of Egypt’s waste went into open dumps or unspecified landfills, far exceeding the regional average of 53%.

Along with our lack of formal recycling mechanisms: Out of 18 MENA countries surveyed, Egypt ranks 15th in terms of the share of municipal solid waste it recycles at just 3%, the report says.

But our waste management system isn’t the only reason we’re (literally) swimming in plastic: Single-use plastics are also cheaper to produce than eco-friendly alternatives. Throughout MENA, prices of single-use plastics are significantly lower than greener alternatives, with plastic cups costing one-third or less what biodegradable cups cost. Fuel subsidies play a key role in this, making it cheaper and easier for companies to produce plastics, the report says.

The plastic waste clogging up our seas has grave health consequences: A 2019 Australian study found that the average person could be ingesting as much as 5 grams of plastic every week, while studies published in 2021 estimate that we might ingest up to 100k microplastic specks each day. Accumulated microplastics in our bodies can lead to inflammation, tissue damage, cell death, cancer, or damage to our reproductive systems, preliminary studies indicate.

And economic implications: Across the Mediterranean, plastic pollution causes the tourism, industrial and fishing industries to suffer an estimated EUR 641 mn in losses every year, according to a 2019 study.

If we want to curb marine-plastic pollution in Egypt, improving our waste management system is the place to begin: The World Bank report has many policy recommendations for how countries can reduce harmful marine-plastic pollution, following the “circular economy” principle of reducing, reusing and recycling waste. As part of this approach, waste management systems need a rehaul, with more robust recycling systems put in place, more allocation of green financing to improve waste management infrastructure, and greater public awareness about reducing single-use plastics. Much of this advice is generic, but when it comes to Egypt, the report notes that the government may struggle to modernize the country’s waste management system unless it integrates the informal solid-waste and recycling sectors.

It’s still too early to know whether we’re making headway on this yet: Egypt’s new Waste Management Act sets an ambitious framework for waste collection, disposal and recycling, but it remains unclear how enforceable it is, and whether it will really be more inclusive of the informal economy remains to be seen. The government plans to integrate the Zabbaleen into the system as employees working under private sector contractors, but they aren’t too happy about the planned arrangement. And much touted initiatives like waste-to-energy projects have struggled to get off the ground.


Your top climate stories for the week:

  • Scatec to build green ammonia plant in ScZone: Norwegian renewable energy giant Scatec plans to build a green ammonia plant in Egypt with an initial annual production capacity of 1 mn tons per year.
  • Lekela is eyeing new investments in renewables: Lekela Power is “actively exploring” potential green hydrogen and renewables-powered water desalination investment prospects with the government and the private sector.
  • Egypt wants to produce green fuels for Maersk: Maersk will soon sign an MoU with the Suez Canal Economic Zone (SCZone) which could pave the way for Egypt to supply the shipping giant with fuel for its new generation of low-carbon vessels.
  • Gov’t introduces green economy incentives: The Madbouly government has approved incentives to spur investments in Egypt’s green economy.
  • Egypt pushes green finance for Africa: Oil Minister Tarek El Molla repeated the call for more climate finance to African countries — alongside continued fossil fuel expansion — ahead of COP27 in Sharm El Sheikh.

CALENDAR

1Q2022: Launch of the Egyptian Commodities Exchange.

1Q2022: Swvl acquisition of Viapool expected to close.

1Q2022: Waste collection startup Bekia plans to expand to the UAE and Saudi Arabia.

1Q2022: Rameda Pharma will begin selling its generic version of Merck’s oral antiviral covid-19 med.

1Q2022: Pharos Energy’s sale of a 55% stake in El Fayum, Beni Suef concessions to IPR Energy Group subsidiary IPR Lake Qarun expected to close.

Early 2022: Results to be announced for the second round of the state’s gold and precious metals auction.

1H2022: Target date for IDH to close its acquisition of 50% of Islamabad Diagnostic Center.

1H2022: e-Finance’s digital healthcare service platform, eHealth, will launch its services.

1H2022: The government will respond to private companies’ bids to build desalination plants.

1H2022: Egypt’s second corporate green bond issuance expected to be announced.

1H2022: The Transport Ministry to sign a memorandum of understanding with Abu Dhabi Ports to set up a transport route across the Nile to transport products from Al Canal’s Minya sugar factory.

15 February-15 June (Tuesday-Wednesday): ITIDA’s Technology Innovation and Entrepreneurship Center is organizing the first Metaverse Hackathon.

March: Rollout of the government financial management information system (GFMIS), a suite of electronic tools to automate the government’s financial management processes (pdf) that will replace the existing “closed” financial management system.

March: Contracts for last two phases of Egypt’s USD 4.5 bn high-speed rail line to be signed.

March: 4Q2021 earnings season.

March: Deadline for the World Health Organization’s intergovernmental negotiating body to meet to discuss binding treaty on future pandemic cooperation.

March: World Cup playoffs.

March: The government hopes to sign a final contract between El Nasr Automotive and a new partner for the local production of electric cars.

March: Target date for Saudi tech firm Brmaja to IPO on the EGX.

March: Egypt to host World Tourism Organization Middle East committee meeting.

March: The Salam – new administrative capital – 10th of Ramadan Light Rail Train (LRT) line will start operating.

March: The new multi-purpose station at Dekheila Port and the revamped Ain Sokhna Port will start operating.

March: General Authority for Land and Dry Ports to issue the condition booklets for the operations of the Tenth of Ramadan dry port.

9-18 March (Wednesday-Friday): The annual Cairo International Fair.

Mid-March: Bidding for the construction of Anchorage Investments’ petrochemical complex in the Suez Canal Economic Zone starts.

14 March-30 June: The “Escape to Egypt” exhibition at the Coptic Museum, in celebration of its 112th anniversary.

15 March: Export Smart conference, Royal Maxim Palace Kempinski, Cairo.

15-16 March (Tuesday-Wednesday): Federal Reserve interest rate meeting.

20 March (Sunday): Applications close for Visa’s global startup competition, the Visa Everywhere Initiative.

22 March (Tuesday): Egyptian German Green Energy Forum, 5:30-9:30pm CLT, InterContinental Cairo Semiramis.

24 March (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

24 March (Thursday): GB Auto Extraordinary General Assembly (pdf).

24 March-1 April: Ahlan Ramadan Supermarket Expo, Cairo International Convention Center.

25 March (Friday): Egypt will host Senegal in the first leg of their 2022 FIFA World Cup qualifiers’ playoff (TBC).

26 March (Saturday): Egypt-EU World Trade Organization dispute settlement consultations end.

28-29 March (Monday-Tuesday): The Egypt International Mining Show (EIMS 2022) will take place virtually.

28 March (Monday): The second leg of the 2022 FIFA World Cup qualifiers’ playoff between Egypt and Senegal (TBC).

28 March (Monday): The court hearing for a case brought by Arabia Investments Holding (AIH) against Peugeot has been postponed until 28 March.

31 March (Thursday): Deadline for submitting tax returns for individual taxpayers.

31 March (Thursday): Vodacom purchase of Vodafone Group’s stake in Vodafone Egypt expected to be completed by this date.

31 March (Thursday): Supply Ministry expected to take final decision on bread subsidies by this date.

April: Fuel pricing committee meets to decide quarterly fuel prices.

April: Ghazl El Mahalla shares will begin trading on the EGX.

2 April (Saturday): First day of Ramadan (TBC).

3 April (Sunday): Bidding begins on the Industrial Development Authority’s license to manufacture tobacco products.

4 April (Monday): CDC Group will formally change its name to British International Investment.

14 April (Thursday): European Central Bank monetary policy meeting.

Mid-April: Trading on the Egyptian Commodity Exchange to start.

22-24 April (Friday-Sunday): World Bank-IMF spring meeting, Washington D.C.

24 April (Sunday): Coptic Easter Sunday (holiday for Coptic Christians).

25 April (Monday): Sham El Nessim.

25 April (Monday): Sinai Liberation Day.

28 April (Thursday): National Holiday in observance of Sham El Nessim.

30 April (Saturday): Deadline for submitting corporate tax returns for companies whose financial year ends 31 December.

Late April – 15 May: 1Q2022 earnings season

May: Investment in Logistics Conference, Cairo, Egypt.

1 May (Sunday): Labor Day.

3-4 May (Tuesday-Wednesday): Federal Reserve interest rate meeting.

4 May (Wednesday): 3 February (Thursday): Deadline to send in applications for Cultural Property Agreement Implementation projects to the US Embassy in Cairo.

5 May (Thursday): National Holiday in observance of Labor Day.

2 May (Monday): Eid El Fitr (TBC).

19 May (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

5-7 June (Sunday-Tuesday): Africa Health ExCon, Al Manara International Conference Center, Egypt International Exhibitions Center, and the St. Regis Almasa Hotel, New Administrative Capital.

9 June (Thursday): European Central Bank monetary policy meeting.

14-15 June (Tuesday-Wednesday): Federal Reserve interest rate meeting.

15-18 June (Wednesday-Saturday): St. Petersburg International Economic Forum (SPIEF), St. Petersburg.

16 June (Thursday): End of 2021-2022 academic year for public schools.

23 June (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

27 June-3 July (Monday-Sunday): World University Squash Championships, New Giza.

30 June (Thursday): June 30 Revolution Day, national holiday.

End of 2Q2022: The Financial Regulatory Authority’s new Ins. Act should be approved.

End of 1H2022: Emirati industrial company M Glory Holding and the Military Production Ministry will begin the mass production of dual fuel pickup trucks that can run on natural gas.

2H2022: The inauguration of the Grand Egyptian Museum.

2H2022: IEF-IGU Ministerial Gas Forum, Egypt. Date + location TBA.

2H2022: The government will have vaccinated 70% of the population.

3Q2022: Ayady’s consumer financing arm, The Egyptian Company for Consumer Finance Services, to release first financing product.

July: A law governing ins. for seasonal contractors will come into effect.

July: Fuel pricing committee meets to decide quarterly fuel prices.

1 July (Friday): FY 2022-2023 begins.

8 July (Friday): Arafat Day.

9-13 July (Saturday-Wednesday): Eid Al Adha, national holiday.

21 July (Thursday): European Central Bank monetary policy meeting.

26-27 July (Tuesday-Wednesday): Federal Reserve interest rate meeting.

30 July (Saturday): Islamic New Year.

Late July – 14 August: 2Q2022 earnings season.

August: Work to extend the capacity of the Egypt-Sudan electricity interconnection to 300 MW to be completed.

18 August (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

September: Egypt will display its first naval exhibition with the title Naval Power.

September: Central Bank of Egypt’s Innovation and Financial Technology Center to launch incubator for 25 fintech startups.

8 September (Thursday): European Central Bank monetary policy meeting.

20-21 September (Tuesday-Wednesday): Federal Reserve Finterest rate meeting.

22 September (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

October: World Bank and IMF annual meetings in Washington, DC

October: Fuel pricing committee meets to decide quarterly fuel prices.

6 October (Thursday): Armed Forces Day, national holiday.

8 October (Saturday): Prophet Muhammad’s birthday, national holiday.

18-20 October(Tuesday-Thursday): Mediterranean Offshore Conference, Alexandria, Egypt.

27 October (Thursday): European Central Bank monetary policy meeting.

Late October – 14 November: 3Q2022 earnings season.

November: Cairo Water Week 2022.

1-2 November (Tuesday-Wednesday): Federal Reserve interest rate meeting.

3 November (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

7-18 November (Monday-Friday): Egypt will host COP27 in Sharm El Sheikh.

21 November-18 December (Monday-Sunday): 2022 Fifa World Cup, Qatar.

13-14 December (Tuesday-Wednesday): Federal Reserve interest rate meeting.

15 December (Thursday): European Central Bank monetary policy meeting.

22 December (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

End of 2022: e-Aswaaq’s tourism platform will complete the roll out of its ticketing and online booking portal across Egypt.

January 2023: EGX-listed companies and non-bank lenders will submit ESG reports for the first time.

January: Fuel pricing committee meets to decide quarterly fuel prices.

**Note to readers: Some national holidays may appear twice above. Since 2020, Egypt has observed most mid-week holidays on Thursdays regardless of the day on which they fall and may also move those days to Sundays. We distinguish above between the actual holiday and its observance.

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